SAN JOSE, Calif. – SOFTBANK Technology Ventures has spent the last few months boosting its staff to help operate a new incubator and invest its fifth fund, a $600 million vehicle.
The Internet-focused venture firm in July hired as general partners D. Rex Golding, a former co-head of technology banking at Morgan Stanley Dean Witter, and Heidi Roizen, a former software company executive. Rayna Brown, former head of human resources for Ziff-Davis Inc. was named principal, as was SOFTBANK’s Chief Financial Officer Helen MacKenzie, said Managing General Partner Gary Rieschel. Rounding out the investment staff are general partners Brad Feld and E. Scott Russell.
As a venture arm of the Japan-based SOFTBANK Corp., SOFTBANK Technology invests in information technology companies worldwide, particularly in the United States. SOFTBANK Capital, an East Coast late-stage venture group affiliated with SOFTBANK Corp., is a separate entity (VCJ, August, page 5). Most recently, the group hired Bill Burnham as a general partner to help run the $1.2 billion SOFTBANK Capital Partners L.P. Burnham worked at Credit Suisse First Boston Corp. as an Internet research analyst.
SOFTBANK Technology will back companies with valuations as much as $175 million, leaving bigger opportunities to its East Coast affiliate, Rieschel explained.
Despite the relationship to its parent company, SOFTBANK Technology mainly raises money from traditional institutional investors. Only 4% of 1998’s SOFTBANK Technology Ventures IV and 25% of the $600 million SOFTBANK Technology Ventures V came from SOFTBANK Corp. The latest vehicle wrapped in July.
Limited partners include Brinson Partners, General Motors Investment Management Co., Forstmann-Leff International, Colorado Public Employees Retirement Association, University of North Carolina, University of Michigan, Crossroads Group, Hewlett-Packard Co.’s pension and Ontario Teachers’ Pension Plan.
SOFTBANK IV, which totaled $320 million, has completed making new investments, and to date, investments average $5 million to $6 million per company. Rieschel expects follow-on financings to increase to $7 million or $8 million, and future funds could average $8 million to $10 million per company.
SOFTBANK Technology will have a new source of deal flow for its new vehicle – its own incubator. The venture firm has leased a 40,000 square feet office in Mountain View, where it plans to relocate this fall. Rieschel envisions the incubator housing some eight to 10 companies for about six months each to help them get off the ground.